By Paul Homewood
It’s worth noting that the OFGEM’s new energy cap calculations are worked out on the basis of a wholesale electricity price of about £83/MWh. This does not include CfD and Capacity Market renewable subsidies, which also get added back into OFGEM’s “Wholesale Costs”.
Instead the £83 is based on Direct Fuel Costs, in other words the fuel cost of a CCGT plant. The gas prices assumed have not been published due to “propriety reasons”, But the gas energy price cap quotes £31.37/MWh as the wholesale price of gas, which is 92p/therm.
That in turn equates to about £59/MWh for CCGT electricity, with 53% efficiency. We can therefore take it that the difference between £83 and £59 is carbon taxes.
This all needs bearing in mind when looking at the new Administrative Strike Prices for AR7 – offshore wind at £113/MWh (or £117/MWh at 2025 prices), for instance.
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Author: Paul Homewood
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